morning. parents are like whew. it was wednesday, september 19th, 2012. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick. students are headed back to the classroom today in the nation's third largest school district. after seven days of picketing and protests, the teachers union in chicago voted to end its strike. the rank and file teachers still have to approve the deal, but that is expected in the next couple of weeks. >> we said that it was time to -- that we couldn't solve all the problems of the world with one contract and that it was time to suspend the strike. >> this settlement is an honest

compromise. it means returning our schools to their primary purpose, the education of our children. it means a new day and a new direction for the chicago public schools. >> we'll have details on the agreement in just a few minutes. at the top of the next hour, we'll be talking about the broader issues of labor and unions with famed corporate executive jack welch. among the other stories on our radar this morning is oil. the boj's move to ease policy today giving prices a boost. as you can see right now, 9505, that's down just slightly. yesterday reports suggested that saudi arabia is pumping more oil and would take action to keep price around $100. we're going to talk energy policy at 6:30 eastern with mark begich. existing home sales at 10:00. chip case, one half of the faceous case index, we'll be joining us at 8:00 eastern. on the political front today, a

new nbc news "wall street journal" poll finds that president obama is leading mitt romney nationally by five points among likely voters. john harwood will join us with more at 6:20 eastern. on the lighter side of things, we'll have a special guest join us in chairs. david letterman's executive producer rob burnett, the director of an upcoming film called "we made this movie." it's got interesting angles on the market. let's get you up to speed. >> he didn't really make that -- >> we made that movie. >> he didn't really make it. there were roads, there were studios that were built. >> you have to tell him that. you didn't really write that book. >> i didn't do a lot of things. the government did it. >> this strike. the draft agreement for the first time links teacher evaluation to student test scores. and if they don't improve, the worst performing teachers get

fired. >> it's a slow process. tenured teachers still have some rights above. the deal would let the city lay off teachers based on performance rather than just how long they serve, which is the idea that that's the way it used to be. >> the people on the lowest -- >> what did rahm give in on and what did the teachers union give up on? >> the teacher unions gave in on -- one of the things they were looking for was smaller class size. >> the big issue was if you get fired, you needed a whole group to get rehired. now only up to 50%. >> this is a stronger agreement than you've seen in several places, but it's weaker than what you saw in washington, d.c. >> what happened? how important were my other headlines? >> they weren't. >> we're going to keep talking about this. is that okay? >> fine by me. >> new contract provides for a 7% pay raise for teachers over the next three years. two major sticking points in the

talks had been job security and performance evaluations. the city will now rate teachers in part on how well students score on standardized tests. underperforming teachers can be laid off during the first year of the new contract. the agreement came on the eve of a court hearing, and today, the city planned to ask a judge to force the teachers to end their strike and go back to work. meantime, a youtube video of the president of the chicago teachers union is drawing some hits this morning. here it is. >> i look dang good on paper, okay? i am the only black woman in the class of 1974 from dartmouth college. whoo. [ laughter ] people are impressed -- let me tell you. i spent those years smoking lots of weed, self-medicating. [ laughter ]

self-medicating. thank you. sounds like you all did, too. oh, i'm sorry, there are kids here. i wasn't supposed to say that. too late. >> i decided videos in general are a bad idea. >> have to be very careful. she's the kind of teacher i would like to have. >> a big stoner? >> i think i might have had teachers like that. i think i had teachers like that. a couple along the way. what? >> nothing. just got to be careful what you say. that's a problem for us. >> there are cameras everywhere. everybody on their phone has a video camera and a click camera. the thing that's a little weird about this is it does start to make a difference where it accounts for 25% of your rating based on the performance that's tied into it. it doesn't have merit pay, but it does take an awfully long time to push some of the teachers out. so you're talking about years in some of the process to get rid of unsatisfactory teachers if

you move to that ranking after two years. >> was there anything here -- they said it was about the kids. is there anything here that seems like it directly goes to helping the kids? >> well, rahm emanuel has been saying that this is a victory because it extends the school day. an additional hour and 15 minutes. that wasn't really part of the contract. that was something that the state law changed earlier this year. >> what? just because i want a teacher -- >> yeah. that was a damning tape. that wasn't a tape where you say wow, she's a great teacher. >> she seems kind of fun actually. >> all right. >> i'm just commenting. >> so you want to loaf and get high in the morning or something at school? >> this is an awkward moment by you. >> thank you. >> i'd have to agree with that. i think you brought this one on. shares of apple closing about $700 above that level for the first time. this morning, there is more news

related to the company. apple and four publishers have offered to allow publishers like amazon sell books for four years. and as joe said earlier today, goldman sachs named a new cfo. senior trading executive harvey schwartz is going to be replacing david viniar. schwartz is among a small group of executives who are considered potential candidates to take over when ceo lloyd blankfein steps down. he's going to get an annual salary of $1.85 million as cfo. viniar is going to be joining goldman's board of directors. he was vital in protecting the company during the financial crisis. here's what whitney had to say about the news. she said we view the departure as a signal that relative calm has arrived for goldman sachs. viniar has wanted to retire for years, but because he was seen as such a sign of stability and

so trusted by the analyst and investor community, retirement has been a dream. he will most likely return to his most beloved compound in california in january. he does have quite a compound in santa barbara. it's one remarkable place. >> how do you know that? >> david was a character, if you will, in "too big to fail." he's a real person. he tried to retire in 2007 before all this. they had conversations about whether he could retire, should retire, what have you. didn't happen, obviously, given what was happening. >> did you interview him out there? >> i never said who was interviewed or where anybody was interviewed. >> you know something about this compound. >> the interesting thing about him -- what do you want me to say? >> so you've been -- >> no, i'm not suggesting i've been there. i'm not saying that. >> you're not saying you haven't. >> i traveled for this story. for this book. >> that means yes then. >> irrespective of all of that,

to me the real question is he was the guy who put on -- i wouldn't put it all on him, the quote "big short." he was responsible for saving this firm. you can give lloyd blankfein all the credit in the world, but david was the guy who really understood the risk. the question is whether harvey schwartz can do it. harvey schwartz was all a client guy. he did trading, but the risk is a whole different -- >> he's like a schmoozer? >> he started as a schmoozer. >> golfer? >> i don't know if he's a golfer. >> but less of a numbers guy. >> started less of a numbers guy. david has tried over the past couple years to really institute a system around himself. but here's the question. there's a treasurer and a chief accounting officer who could have been him. could have gotten harvey's job. >> why didn't they? >> the question is will those people stay. >> they could have gotten the cfo job? >> yes.

and the question in the market is if they stay, all is well and good because they understand what david was trying to do and there's really an infrastructure. if one of them decides to go, i think the story changes and people start talking about what it really means. that's not to say harvey can't do this. he's a very qualified guy. but that is sort of the underlying central question. >> but instead of the other two -- >> that is true, too. that is a good question. i don't have the answer. harvey was always considered one of the sort of trusted lieutenants both of lloyd and importantly of gary coen as well. that's how this seems to have sorted itself out. anyway, let's talk about some other news headlines this morning. the bank of japan boosting asset purchases by double the usual amounts. slowing global demand and mounting tensions with china have hurt chances of a near term recovery in japan's export

reliant economy. take a look at the yen. 78.92, inching up slightly. james bullard argues that the fed should have waited for clearer signs of a flagging economy before launching qe3. in an interview, he says he would have cast his opinion as a no. bullard is worried about the risk of future inflation. he backs a proposal for a return to only having a single mandate. we talked about similar issues with dallas fed president richard fisher on "squawk" yesterday. >> let's give the chairman some credit here. he's doing what he wants to do, has to do, should be doing for the economy. the efficacy of this program is where we disagree. there are costs and benefits. i argue more on the cost side. others argue on the benefit side. a decision was taken. instead of hammering the federal reserve, point your fingers at the congress. >>. and in other news, a tiny

central american nation of belize is not going to be making a crucial deadline for making a payment on its sovereign bond. this paves the way for a formal default in $550 million. it would make a mark of about half of the government debt. here's your example. >> and then idaho sat said joe. they must want me to comment. i haven't been to belize. >> i think it's because we went out of order with the teachers union. >> i think they want some comments on the story. >> vacationing in belize. is it going to be cheaper now? >> you said this before. i think it's a sad story. remember that other one? what was that sad story? >> california -- it was stockton. >> you're very empathetic. when stockton had some problems, you were very sad. i'm saddened about belize. how's that? >> do you think it's cheaper to

go on vacation? >> you're happy when they make a debt payment. but this is not europe. didn't they say south america? south america is not europe, is it? >> it is not. >> so this is different than -- >> than the european crisis. yes. >> sit spreading? >> i think this is a tiny little issue. >> that's all i got. you said joe and i felt like i had to do something. >> why don't we check on the markets. >> fine. >> i think it should have said becky. >> let's check on the markets this morning. futures are indicated higher today after a mixed close yesterday. the dow was up slightly by about 11 points. the s&p and nasdaq were down slightly, but now they are 32 points higher. s&p futures are indicated higher as well. dow was the only index that ended higher and the nasdaq had back-to-back declines, the first time in nearly a month. transports did underperform the broader markets yesterday. that came after fedex. that warning that we heard about

right here on the show. so it did spread to the other transports as well. why don't we take a lauren conrad at oil prices. we told you about some of that this morning. the tenure is yielding 1.793%. dollar has been the big story. euro was down for the second straight day against the dollar, its worst two-day losing streak in a month. this morning, the dollar is higher across the board. still, the euro is above 1.30. gold prices -- right now up by $4. 1,775, 30 cents an ounce. >> okay, now we'll go and get a global market report from kelly evans, standing by in london. you're not going to talk about belize. probably could. >> no. joe, the belize story is

actually fascinating because it does show that investors really aren't getting any favorable terms out of these south american countries. it's like why would you then give money to anyone you potentially think has literally no interest in paying it back. if anything, just funnel more capital away from south america towards other parts of the world. but let's talk about asia. over here, japan basically saying anything you can do, we can do as well. a 10 trillion yen asset program. that bottom about 1% on the nikkei. so we did see a broadly positive tone across asia with the exception of india sensex. at least the spat over the east china sea islands. the mood extending to europe, but we're not seeing huge action here. if we take a look at the bond curve, here we've seen some bond

curve. the schatz with a positive yield for the first time since june. it reflects the rotation into some peripheral debt here . spain seeing prices come in. yields falling a little bit today. just over 5% respectively. becky already hinted what was happening there in the u.s. speaking of germany, had this really interesting moment this morning where bundesbank president jens weidmann, who has been quite controversial lately with his criticism of the european central bank, at an anniversary talking about -- in some essence likening what they are doing to a faustian bargain, basically a deal with the devil. that's generating a lot of commentary this morning, but not necessarily affecting action across the market too much. a quick look at commodities. that's where things are happening this morning. the saudis are perhaps pumping more oil, upward of ten million

barrels a day. nymex and brent falling. brent down more than .6 of a percent. london did say it reached an agreement to raise minors. keep an eye on anglo-american platinum, reporting violence, rubber bullets being fired into the crowd. supply side issues are going to be -- are going to play to the platinum price for quite some time. this issue is not over yet. back to you. >> thank you for not disappointing when it came to belize. we knew you had something up your sleeve. >> argentina is greece ten years ahead of schedule, so it's a really fascinating situation to keep an eye on there as well. >> belize is the only nation in south america where english is

the official language too? >> now i do. >> i had to look that up. you knew this other stuff off the top of your head. >> kelly, you know what day it is, right? >> it's national pirate day. i know. >> national talk like a pirate. national talk -- it's not national pirate day. it's national talk like a pirate day. >> my apologies. >> can you give us an argh? i'll give you one. what is that movie rated? argh! never mind. >> we get the joke. i think we've hit every lame pirate joke already on "worldwide exchange" this morning, so i'll spare viewers. >> i know a dirty one. i can't remember it, though. >> can we wear eye patches? >> an eye patch. >> when we come back, john

harwood will join us with the latest poll findings in the white house. today is international talk like a pirate day. this is what we do every year. we try to get some of your jokes to come in with us. if you go ahead and send us some, if they're any good, we'll read them on air. today is the tenth anniversary of the worldwide celebration, so tweet us your jokes. the jokes are already coming in. here's one for you. why couldn't a 14-year-old go to the movie? because it was rated -- >> argh! >> stick around, we'll the right back. it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade tdd#: 1-800-345-2550 directly online in 12 markets in their local currencies.

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the results of the -- we're on. the results of "the wall street journal" nbc poll are out. cnbc's chief washington correspondent john haaarwood has some of the -- do you know why i did that, john? you look totally clueless. not that that's any different from normal. >> are we on live tv? i thought we were goofing around on the break. >> it's international talk like a pirate day. did you know that? >> yeah. if i could talk like a pirate, i would do it. >> kevin ferry is very good at it. >> he doesn't even try. >> i just don't have it. you want some poll results? >> i see the bounce in your step already. rasmussen has obama up.

gallup has obama up. another poll i just saw has obama up by one. who were you talking to to get these poll numbers, john? the people around the studio down there? how did you get plus-five? >> our pollsters, as you know, are peter hart and big mcinturf. what they're doing, they did a survey over the last few days and what we found was that barack obama has emerged from the post-convention period with a clear lead over mitt romney among likely voters. also registered voters. one point smaller. 50/45 among likely voters. one of the building blocks of that lead, there are three things. first of all, greater level of confidence in the country. when you ask people is the country headed in the right direction, that number, which has been covering around 30, is now ticked up to 39. not huge, but a step in the right direction. secondly, economic optimism. when you ask people is the economy going to be better off than a year from now, that's now

42% saying yes, it's going to be better. more than twice the share who say it's going to be worse. now, that's happened because of a couple of reasons. one, barack obama has gotten himself healthier on key issues. not only does he have a clear leader on medicare, he's ahead by six points over mitt romney on the question of who would be better on taxes. on the question of who would be better at managing the economy, which is the top issue for mitt romney, barack obama has pulled even. finally, joe, when you take a look at the framing of the campaign, what is the campaign about? barack obama has succeeded in pushing that forward to something about the next four years rather than just the last four. if you ask people are you better off than when barack obama became president, by 41% to 38%, they say no, i'm not better off, i'm worse all. but when you say who is better prepared to lead the country for the next four years, 11-point advantage for barack obama. 47% say that he's better prepared, 36% for mitt romney.

he needs to turn that number around. he needs to get past this controversy that we've been talking about the last couple of days over this fundraising video. >> 31%. you're able to overcome that, that it's only 39%. obviously that is looking back on where we've been in the last four years. the thing that may be different about this, john, and we've got a colorado -- university of colorado very well respected poll that uses economic data to see that romney should be up. we've got all those facts in the past that if it's above 8%, there's no way it's ever happened -- >> it's not much of a fact, but go ahead. >> what's that? >> that's not a very potent fact. >> all of these things that used to be true, if you can say well, it was so bad -- if you still got -- can get some mileage out of blaming bush, then all these bets are off because it wasn't the guy that's running right now, and you heard bill clinton say nobody can -- that's what

people -- anyone who's gone from 30% right track to 39% listened to him when he said nobody could have done any better. now the mantra is it was such a mess and the problems have been so long in building that it's going to take more than four years, and people must be giving him the benefit of the doubt to be in such a poor position and to still say i'm going to give you another chance means that you're not necessarily tagging him with what happened. >> well, a couple of things about that, joe. throughout obama's presidency, when we asked the question is the economic mess something that barack obama caused or that he inherited from president bush, you've gotten a majority of people -- or at least a plurality saying it was something he inherited from bush. nevertheless, that was weighing down his poll numbers and his approval rating, and the right track issue, it's just gotten late bit better and bill clinton seems to have contributed to that. >> thanks, john. coming up, we have senator

begich from alaska.

♪ trouble good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew. there's no pirate stuff for an dru -- andrew. it's john harwood.

>> rebecca. middle name? >> students are going back to the classroom today in the nation's third largest school district after seven days of picketing and protests, the chicago teachers union voting to end that strike. teachers must still approve the deal, that's expected over the next couple of weeks. >> we said that it was time to -- that we couldn't solve all the problems of the world with one contract and that it was time to suspend the strike. >> this settlement is an honest compromise. it means returning our schools to their primary purpose, the education of our children. it means a new day and a new direction for chicago public schools. >> the new contract provides for a 7% pay raise for teachers over the next three years. two major sticking points in these talks had been job security and performance evaluations, as they are all in these issues around the country.

the city will now rate teachers in part on how well students are able to do on standardized tests, and underperforming teachers can be laid off during a first year of a new contract. >> it's a slow process. it does step up gradually over time. >> it's not easy, though. >> from 25% to 35% of your rating comes on these standardized tests. it does bump up over time. both sides had to give something that they didn't want to initially. the markets, yesterday we did see a mixed close. if you check, up this morning across the board. the dow futures up by 30 points. s&p 500 up by better than two and a half points. oil prices have been down slightly, but again, this comes after some big gains recently. right now down about 27 cents to 95.02. the ten-year note was below 1.8%. that yield, you thought it couldn't get any lower, but it seems to just about every day anyway. the dollar has been a little stronger across the board, but

the euro is still trading. awaiting their central bank to make sol final interest rate cuts. euro has really run up pretty rapidly over the last week or so. gold prices -- i think the last time we checked were at 1775. >> pirates lost last nation. >> they did? >> yes. to milwaukee. >> you see that go across on the bottom? >> yeah, i was waiting for it. i'm fully onboard with this pirate thing. >> you got a joke, right? >> i do, but you know what your initials are? rs. >> you know who's feeding me all these things? the director. aren't you directing the show? >> way to go, paul. >> he's giving me all these. argh! >> there it is. shell's arctic drilling plans -- you could do arctic.

i can't do it. have been put on hold for now. what does this mean for the future of drilling in the u.s.? alaska senator mark begich is joining us now this morning. he has been a very outspoken supporter of drilling in the northern waters. good morning to you, sir. >> good morning. you guys are having way too much fun this morning. >> can you do it? should we even ask you too? >> argh! >> very nice. >> in alaska, we like to take pirate fishing ships out. so we understand pirates in alaska. we're okay with you. >> okay. so, senator, when you think about what's going on with shell, if they were to get this production back online -- it sounds like they will be able to do so in 2013, what is that going to do to the impact -- to really impact oil prices? do you think that unto itself will do anything? >> i don't think it does a direct impact to oil prices, but think about this. for 30 years we've been talking about drilling up in the arctic. in the last few years, things have been moving forward. shell has had some efforts this year, and next year they'll be

in the water up there. let me give you a number that i think is an important number. 24-26 billion barrels of oil today. my guess is probably closer to 40 to 50 once they start developing that. so it's a significant amount for the oil pipeline in alaska to utilize. it may not have a direct immediate impact on oil pricing, but it does get more oil into the pipeline and get more into domestic production. in an area that people have said for years that would never happen, and it's happening now. >> senator, you're a democrat. and invariably, the discussion comes up about the environment and these environmentalists, some of whom have tried to block this. how do you deal with that and reconcile some of those issues? >> one thing about drilling in the arctic, about 30 years of waiting and pushing, to get the arctic is as hard as getting epa to change their mind and getting

democrats onboard with oil and gas development. one thing we've done, i'm born and raised in the state, our focus is to do it right. make sure it's environmentally safe. in the late '80s, there was oil exploration drilling in the act ti -- arctic, but you never heard about spills because we took a high precaution, because we had people with the issue of subsistence, making sure we can do this the right way. we're very cautious, but at the same time, we're an oil and gas state, a natural resource state. i spend a lot of time talking to democrats and the environmental community about how we're doing it. a good example is look at what shell did. stopped the drilling at one point when the ice was moving in the wrong direction. they've only done the pilot holes this year. next year they'll move forward. what that says is the rules we've set out for them the operate under, they're following and it's working in the right direction. so it's a constant -- to be very frank with you, it's a constant education to members and sitting

down with the environmental community and saying look, here's how we're doing this. and at the same time, look at the track record in alaska. >> senator, you're making all these points. not only do you seem to approve of the environmental aspects of it, but it also seems like you're okay with the profits that these private entities would be earning. are you sure that you're in the right party? maybe you need to look in your soul and decide -- maybe it's your problem. >> now you're about to meet an alaska democrat. >> like a texas democrat. >> exactly. but one of the things -- i will say this. look at the democratic caucus. since 1980 -- >> do i have to? >> well, i'm saying in 1980 was the last time a democrat from alaska has been in that caucus. so i spend every day -- >> and you were a mayor. you had to balance the budget, so you've actually had a where you had to -- >> had to do something. and i come from the small business community. so you actually have to do these things, make a budget.

>> i'm a pirate. >> senator, before you go, a constituent just wrote in and wants to know -- he says since alaska's got so much gas and oil, why are we paying the highest prices in the nation for fuel? he's watch sog ying so you can him. >> that means they're watching at 2:30 in the morning in alaska. we don't have enough refineries. we have about 30% of the gas supply of the country is tied up in alaska, and we're about exporting some product, but also make sure available for domestic. so our problem is refinery and also capacity -- the volume that we can sell and move in alaska. we're a small state population-wise. >> senator, thank you for playing along this morning. we appreciate it very much. >> absolutely. >> a lot of fun. >> thank you guys very much. have a great day. >> talk to you soon. >> all right. i'm a little worried about this. a viewer sent these in. these are not mine.

>> a disclaimer. >> a little worried about this. a little worried. it's cable, right? what type of sock does a pirate wear? this is an easy one. >> give me a hint. >> arguile. pirate walks in with a big ship's wheel down his pants. the bartender says do you know you have a big ship's wheel right down your pants? he says, argh, it's driving me nuts! up next, a special guest. i needed the laughter on that one to drown out -- >> rob burnett, he's on his way to talk about "we made this movie" and ten-year treasury spreads. so he's expecting to talk about business. >> so we repeat that. did you get it? >> i got it. i liked it. >> maybe he can start writing for us. >> that was good one, i thought. >> tweet us your pirate jokes.

@squawkcnbc is our handle. they're already coming in. what's a pirate's favorite fast-food restaurant? that's an easy one. aaarrrby's. >> i love arby's. roast beef, very good.

coming up, david letterman's producer, we'll talk about his new movie and the changing business of hollywood. first as we head to a break,

here's the president on "letterman" last night. >> how much do you weigh? >> you know -- [ laughter ] about 180. >> 180 looks good. >> thank you. >> that's just about where i am and i don't look so good at 180. >> you look sharp. >> you haven't seen me naked. [ laughter ] >> we're going to keep it that way.

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welcome back, everybody. traditional ways of marketing a movie can be extremely expensive, and with foot traffic slowing down, a lot of people are starting to ask if it's worth the risk. our next guest is looking to disrupt the industry with his latest project. rob burnett is the ceo of worldwide pants and is the director of the upcoming film "we made this movie." thank for coming in today. >> thanks for having me. i've done a lot of press for this movie, a lot of shows. >> i've seen a lot. >> this is the one that i'm excited about. >> nice. >> this is one that might get me in trouble back at my show. this without a doubt is the best show on television. i watch this religiously. i understand almost nothing on this show. and yet i continue to watch. >> that's weird. [ laughter ] >> i think maybe why is i think that what i'm waiting for is i think there will come a point

where you make him cry. [ laughter ] i think that's going to happen on this show. >> obviously you don't watch every day. because that has already happened. that has already happened. you know who's going to cry today? he has five emmys. how many do you have? nominated for 11. how much did you win? you have five? >> i have five. you can have two. >> you don't need all five. you're not going to get one here, my friend. >> he thinks it was the best on tv. he wants to see him cry. >> i don't want tears -- >> this is like a rubber necking situation. >> i want you to punch him. that's all i want to see. >> we get that from viewers constantly. i want you to punch him. because she won't get in the way. she'll just sit back and kind of watch. you know i mean? >> what do you want me to do? >> i want you to cry. you're not going to win an emmy.

you're listening. come on, man. >> wow. is this selling movie tickets? no, it's not. >> all right, let's talk about your movie -- >> i can't believe this. >> i love the >> this is letterman after 30 years. >> who named this segment chairs? how long was that meeting? have you seen -- >> yes -- >> this is the lamest intro. chairs and you're sitting on chairs. genius. genius. >> look at this. look at how bad this is. look how bad that is. we're laughing at how bad that is. >> i can't believe i'm on "chairs," and i would never worn these socks if i knew i would be on chairs. >> we are giving to a lot of credit to a guy wearing red socks. >> well, what are we going to do? >> we're going to talk about the movie. >> let's do it. >> joe already started asking me, did you make this movie this morning? >> because we made this movie. you didn't really make it.

>> i was part of a big team, but the movie is about -- >> you drove there on roads. it's about five high school kids who have no prospects, they live in kind of a blue collar town and they decide, well, you know what? we're going to get out of this town by making a movie. they set out to make a movie. they have video cameras and try to make sort of a "jackass" "borat" movie. the trick of the movie is the main guy is so convinced it's going to be huge he gets three geeky freshmen to follow them around with cameras because he wants the making of. he wants the dvd extras. by the end of the movie, what happens is the movie they set out to make is awful, but it actually turns into a very touching kind of coming of age movie as by accident these kids catch their lives. >> so the dvd extras are what makes -- >> that ends up at the very end they realize we have the wrong movie, the movie is really the

movie these -- >> and bill pullman? >> well, in their ridiculous plan is that in their town bill pullman went to their high school. he's the big guy. there's a statue of him in their high school, which is now in my office. i'm the only man in america with the exception of bill pullman that has a bill pullman statue. they think if they can get this to bill pullman, they can get it to theaters across the nation. >> he was a good president in what was that? >> "independence day." >> this is being distributed online? >> yes, well, yes. we partnered with this great company called snag films started by steve case, and they origin originally started, and created this web distribution center of documentaries and they want to do this with independent films. so when we finished our movie, it's a small movie, cost about $1 million to make.

it's, you know, there's all unknown actors, pretty much in the movie. so we met with our agency and we thought we can do a traditional release where we maybe get a couple of screens in new york, couple screens in chicago, but snag came along and loved the movie so we got this concept where on thursday, tomorrow, we have an enormous premiere in new york city, red carpet, you guys are all invited. >> really? >> you're all invited. >> wow, thanks for the late invite. >> i invited her six months ago. i'm not an idiot. >> what time does it start? >> 6:30, you'll be in bed by 9:30 at night. >> not bed. >> that's as late as i can do it, really. >> i could watch this at home on the internet? >> that's the thing, the premiere streams online for free. if you go to wemadethismovie.com, you can watch it for free for 24 hours. >> is there advertising related with this? >> not the premiere, it's all free. >> word of mouth.

>> i will make nothing on the premiere, zero. >> how does it work then? >> i feel like an idiot, i'm making nothing on this. this is why i like this show. i don't know anything about money. >> hold on. >> ceo is your title, though? >> yeah. imagine that. but for a tv show. i'm ceo of a tv show. no, it's obviously we're trying to build word of mouth, get as many people to watch it and then hopefully when we go to itunes and all this, we have built a, you know, audience, and then we start selling. >> how do you keep people from once it's out there online, stopping them from kind of stealing it and replicating it all over the web? >> it's an interesting question. there is technology that does prevent that. but an interesting story was louis c.k., he's about stand-up comic that turned everything upside down. and he put a stand-up special on the web without drms where he

basically said, he just said please don't copy this. he just trusted the web and, you know, maybe some people did, he said pay me $5 and he made tons of money. >> that's your plan? >> that's my plan, except our movie you can't copy. make him cry, we need a button on this. come on. >> wow, i don't know how i should feel about this. >> some day that will happen. but not right away. >> no. >> it could be any day. >> what happened to -- >> november. cry in november. >> this is why -- november 7th if obama wins, it's possible he might cry. >> he's so good. >> the first time i shook the hand of a sitting president. he was standing at the time, but it still counts. >> look at him now. looks like you're going like this, which i'm not sure what that means. >> no, i can't, but i'm not on. >> you're a genius. genius.

coming up -- a man who needs to introduction -- >> that was great. >> "we made this movie." >> i'm not happy about this whole situation. >> you're never going to win an emmy. jack welch, we'll find out what he thinks about everything from the teachers strike, mitt romney, the video, the fed, the economy, and tweet us more of your pirate jokes, i said nuts, i'm not going much further than that. @squawkcnbc is our handle. here's another one, pirate money managers specialize in arbitrage. we've hit the point of diminishing rushes on this. >> we saw that movie online too. >> you did? >> it was lousy. at optionsxpress we create easy-to-use, powerful

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- please, john, call me jack. - i actually go by jack as well. - i don't think so. talking tough,we straight fm the gut. >> good to see you again. >> please, john, call me jack. >> i actually go by jack, as well. >> two hours with jack welch. get his thoughts on the economy, politics, all off the cuff, and all on the money. it's your money, your vote. the race for the white house is getting heated. virginia governor bob mcdonnell is here on how mitt romney plans to put america back to work. and "squawk" takes it to the high seas. >> yes. now you will survive. >> it's international talk like a pirate day. arrrh, matey, the second hour of "squawk box" starts now. ♪

good morning, everybody. welcome back to "squawk" on talk like a pirate day. i'm becky quick along with andrew ross-sorkin. the futures are indicated higher. yesterday we had a mixed close. now you see the futures up by 33 points, s&p 500 up by 2 1/3. japan bank becoming the latest to expand monetary easing. that's about $126 billion. and that move to boost the japanese economy helps the nikkei finish at a four-month high and pushed the yen higher. teachers in chicago will be returning to work today, ending the first strike in 25 years. that comes after a tentative contract settlement that will be put to a union vote within a few weeks. it's expected to be passed. we will have more on this story in a few minutes, as well. and a multibillion dollar sports deal could be in the works.

it's putting its aeg subsidiary up for sale, owns hockey los angeles kings and the staples center arena. also a part owner of the lakers. also owns the new barclays center arena in new york. >> and they were behind the michael jackson concert tour. and were involved in the crazy dispute over his insurance and his death and they knew he was having all these problems and it was a fascinating little story. >> our guest host today is jack welch, founder of the jack welch management institute. that's all we're going to say about you? >> does he need an introduction? >> no, not really. took ge -- what is your favorite thing? ge was split adjusted less than $1 a share when you took over and it went to $60,ink, didn't it? >> went up from $13 billion in market cap to over $400 billion. >> revenue went from $8 billion to -- >> from $20 billion to $150 billion. >> 150 -- westing house, i always pointed to how it can

make a difference who's ceo. and you got paid a lot. you're a fat cat. but -- >> good morning. >> think about westing house, same mix of assets at the same time. i hit wx in there all the tile. westing house wasn't even a dow component. but similar mix, you took ge to where it was, westing house eventually just went in the tubes. >> we had an incredible team of people. >> good economy. >> good economy, we had great people. it wasn't so easy in the '80s, got easier in the '90s. >> you know what, you were there too. at what i always call like a similar period of where we feel so i don't feel very hopeful w now. for all the hope and change i was promised, as an american, i'm very similar to the way i felt in 1980 in terms of right track, wrong track and whether we ever get our mojo back and

you in the '80s -- >> i was there when ronald reagan -- >> exactly, exactly. >> same time. >> and whenever we ask anyone is it still morning in america, best days still ahead, i always say yes, and of course, and everybody says that, but with globalization and china and the way that the country seems to be moving, i don't know. i need to be convinced once in a while that the best days still are ahead. you? >> who's innovating? who's coming up with all the new stuff? we are. you don't see innovation coming this way very b often. innovation's coming from here, we need more of it, need better education. we need a more supportive government. we need a lot of these things. >> can it happen again? >> yeah, if we get the right administration. >> if president obama was reelected, would it delay by four years getting back on track in your view? >> in my view, it would.

>> simple yes, it would. >> absolutely would. >> would we be too far past the point of no return in four years if obama care will be law, a lot of the regulations will be -- they're not going anywhere. could we come back from it? >> regulations are going to escalate. >> over the next four years if it happens? >> you get by this election -- >> and you'll never get rid of them. >> you're going to drown in regulations. i've got my usual laundry list of them. >> we're ready. >> and what do you think right now the odds are that -- where do you think the election is right now? yesterday john harwood, were you watching? characterized it -- romney late in the fourth quarter and he's down two touchdowns. is that how you -- >> i think it was a touchdown and a field goal. >> and i said who's the quarterback? and i think he said, i don't know, sanchez. so we're screwed. >> the democrats are selling a line. i had nantucket this summer with about the number one democratic

operative in the clinton administration. he told me for over two hours, it's over. forget it. what are you guys trying for? >> why even have an election? >> why even -- we're in, we're in. i mean, this is a constant -- now the challenge for the republicans is they've got to get this thing out of whether or not romney said 47% or obama said that egypt was an ally or not, we've got to get a big, big picture. he's got to, in my opinion, he's got to take america and paint 2016 with him there and with obama there. here's what we'll look like in '14 and '16. and he's got to go right down the list. he's got to go here's what my tax plan is. and my tax plan's going to do

this and here's what i'm going to do about regulations and energy and when they come back, some reporter's going to say this, but a left wing group has just decided that tax increases are going to be $2,000 on the middle class. i will veto -- i will veto any tax that goes up on the middle class and any conditions and stop talking about stuff like that from some wacko group -- >> he could get rid of those questions by giving more specifics. the specifics of the -- >> but he's got to give big speeches. on the economy, here's what we'll look like. we'll get 3% to 4% growth, unemployment will be down to 5%, and here's how. >> why do you think he hasn't thus far? he's got a lot of money left, much more money in terms of ad spending for the end. >> he needs to get a large -- >> he needs to get the middle? or you think he needs to just drive the base out?

>> he needs to get the middle. and he's got -- and he's also going to get some reagan democrats to come over. >> i'm painting a picture of what it's going to look like. when we talk about, for example, we talk about entitlements. i'm going to have this thing growing at 3% to 4% because i did these things. my energy's going to be exploding, people are going to have jobs. i'm going to be able to pay for those that because of skill base because of education have fallen below. i won't have to borrow from china to do it. i won't have to redistribute wealth to give you your benefits. i'll get it because we'll have revenues from the tax base. he's got to take it one by one. go through, economy, education. this chicago thing shows you just exactly where we are as a country. imagine getting this puny little

improvement. it's going to be years before -- because kids can't wait. it's going to be a whole crowd of kids that are going to graduate, ill-equipped for the society because we've got some pot-smoking union leader up there on the stage bragging about she went to dartmouth -- we're going to be able to drop one student here and there. one teacher here and there. come on, andrew, we need revolution. my education policy will put teachers first, not unions first. i will attack this system -- >> jack, everything you're saying sounds great if you were a strategist, that's what you'd want to say. but why do you think he hasn't said it thus far? >> he's got to. look -- >> there's a peggy noonan column today. the press wouldn't cover it. >> that's not true. >> the carping from the right is unhelpful at times.

sometimes i don't really understand where a lot -- >> these little did he say this or did she say that? did obama say guns and religion? we've got to get off that. we've got to talk about what america's going to look like in the world. he's going to have a military. he's going to spend on the military, not for war, but for a strong military gives you peace. and he's not going to let us be just have middle east things all the time from a position of weakness. i mean, but lay each one of these out in a big, big speech over and over and over again. and to big crowds. packed stadiums, do anything. get this -- >> yep. >> it's so clear. it's so simple. we -- the republicans should be winning this election hands down with this economy, this situation. it's frightening. >> right. all right. we will have more from jack.

i was kidding about sanchez. i was frustrated by that -- >> analogy? >> the game. sanchez, he's like jek l and hyde. pirate walks into a bar, bartender says where's your buccaneers? the pirate says under me bucking hat, anyway. >> very nice. >> killed that one. >> under my bucking hat. where's your bucking ears? >> you used to be his boss? >> now i'm just a working stiff. >> okay. coming up next, we've got a high-profile departure from goldman sachs. mary thompson's got the details on that. and business and politics collide when we welcome governor bob mcdonnell of virginia. we're going to talk the economy, taxes, jobs, and of course, the run for the white house. "squawk's" back after this quick break. . much more from columnist, author, and business leader jack

welch when "squawk box" returns. up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again.

we're back this morning. a high-profile departure from goldman sachs. announcing that chief financial officer david vinier is stepping down. >> that announcement coming after yesterday's close. the timing a bit of a surprise, though his retirement not

completely unexpected. howard schwartz, a 15-year veteran of the firm has been named new cfo. the new scene is a traditional passing of the baton and not a sign that anything is amiss at goldman. the longest serving ceo of any big wall street firm, he will retire at the end of january, then becomes a nonindependent director at goldman where he's worked since 1980. on a conference call, replacement schwartz said he set the standard for cfos, while viniar said it was a good time for him to leave. >> everything about the firm is in very, very good financial shape. i think we are performing as well as we could given the operating environment. i mean, we always want to do better, but i think we're performing well. >> a graduate from rutgers, the 48-year-old schwartz is described by a person familiar with both men as a bull to viniar's antelope. saying he's up to the

intellectual challenge of the job, which includes cooversight of the risk committee, as well as heading up the technology and finance units. the co-head of security, schwartz is said to be well-liked and to have few if any enemies within goldman. analysts noting schwartz' experience in client facing businesses while questioning his readiness to oversee risk. he said his most recent position provided that necessary experience. >> so i've spent a huge amount of my time focused on the risk. and i guess looking back on it, maybe it was fortunate timing we were named co-heads early in 2008. so i really have been head of the securities division during some of the most turmoil points. >> his departure should squash further rumors about lloyd blankfein leaving. very close to one person cited as a potential blankfein

successor. >> one of the questions i heard overnight talking to people people are watching the treasurer, elizabeth robinson and sarah smith, one of them could've taken this job, the question is, do they stay? or do they go? what does that mean? >> and on the call they said they didn't anticipate any changes to the support staff. >> i'm not sure they said the supporting -- supporting team, i should say. neither one of them are support staff in the traditional sense at all. they're very smart ladies, yes. >> mary thompson, thank you for that report. our guest host today is jack welch, and of course, the founder of the jack welch management institute. we should just say jack. >> he likes plugging that. >> we need to plug -- >> which is booming, by the way. >> i know. >> we are employing 60 people too. we went from 0 to 60. >> and? >> and we have 350 students now. >> i didn't understand the

potential, jack. someone talked about it like law school how expensive it is. and really it's not in the classroom. it's totally possible to be a great lawyer and ace the boards from doing it all on the internet. >> i'm telling you -- >> you can do it that way. >> ten years from now, this will be the most disruptive thing going. we are -- we went from 40 to 80 -- our surveys are incredible. the students are getting raises, promotions, they're paying $30,000 for mba, getting in 18 to 24 months. we're an mba school, 350 students, we'll be well over 600 students next year. >> that's a fast launch. >> it is really taking off. and people love it. you should see the mps scores in the 70s. >> what is that? >> where you would promote the school to someone else. a nine or ten, you'd recommend

it to everybody, 70, you like it, five to six, and a one to three, you would tell them to stay away. we're getting crazy numbers. and the success and we brought this cornell dean on the faculty. the head of the school, he's doing a great job. i mean, it's -- it is shocking how fast it's growing. >> i want to talk about the economy and get your thoughts on the bernanke and qe-3, becky calls it qe-infinity, joe's calling it qep. >> those are both good words. this qe-3, i don't have great expectations for these things doing much. but this one has more language to it than it has money. it's shorter on money than qe-1 or qe-2, and it does have this perpetual, i'll keep doing it

until he willl freezes over or something. >> does it change anything for you? in the decision making processes about hiring people? >> not that decision. but if, in fact, demand occurs, i might change. but, look, what does it do? it raises the risk trade. it gets equities up, okay. it's going to improve equities. >> right. >> who's going to really change their life from it? i don't get it, it's a lot of fun for traders. a lot of action. >> if i were a ceo, doing a deal beforehand, but i don't think that creates jobs because you don't want the money be sitting in the bank or sitting around. it'll be worth less over time. i don't know that creates jobs. >> in private equity today, money's abound, you can do as much as you want. leverage is up. we're going to do all the old things. money's free.

>> right. >> but it doesn't really change somebody -- if you don't have a job. the economy situation is bubbling along at 1.5% or so. >> but on the deal aspect, is there any sense now is a better opportunity to do a deal this week than it was two weeks ago? >> no, but it's a nice time to refinance. >> but you're not buying anything new? >> well, when we see something, yes, we're buying new companies, but we've been buying them all along. it makes it -- >> what's the biggest deal you can do right now? because one of the things that's happened over the past couple of years is obviously the size of the deal has come down and that's changed the dynamic in terms of the whole takeover business, but also the premium people are putting on different companies. >> we're doing a lot of deals in the $1 billion to $2 billion range. and we're doing them. and our companies are doing quite well. >> even in this environment?

>> go ahead. >> real quickly, we want to take a shot of the space shuttle "endeavor," taking off from florida right now. this is at the kennedy space center. it'll stay at houston tonight before it takes off at los angeles. that'll be where it stays and put on display there. it's expected to fly over a lot of different landmarks in l.a. before it lands there too. things like the getty center, the california science center. but that's the space shuttle "endeavor" as it takes off for the first step on the last journey on its way to houston right now. all right. coming up, the chicago's teachers strike intensifying the debates over how teachers are evaluated, hired, and fired on a national level. we'll head to chicago next for the details and what it means for education. and then governor bob mcdonnell reacts to the romney video. [ horn honks ]

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welcome back, everybody, chicago public school teachers voting to end the strike and resume classes.

nbc's education correspondent joins us from chicago with more of the details on that deal. what can you tell us? >> 98% of the teachers delegates voted to suspend the strike and head back into the classrooms today. some 30,000 members rank and file have to ratify this. that's going to happen in a couple of weeks. people say it's just a formality. this heads off a confrontation with chicago's mayor rahm emanuel who threatened to go to court to force them back in the classroom. under the new contract, they're going to find they get a salary increase of about 7%. but one of the biggest thing was teachers evaluations, this is part of the national debate. here they're saying only 30% of the evaluation will be linked to student performance on test scores and in addition they were also concerned about re-hiring. principals will retain the right to rehire, but 50% of the rehires will have to come from a pool of laid off teachers. a lot of concern about that because there's talk of closing

upwards of 80 to 100 schools and they want those laid off teachers to be considered for rehiring. right now the strike is over, kids going back to school in chicago and a lot of parents are pretty happy about it. >> rahm emanuel has said he thinks this is a fair compromise. if you look at it, did each side get something? or do you think one side came out ahead? >> reporter: no, i think each side got something. the city is looking at almost $1 billion in terms of a deficit for the school department and there's only so much it was going to give in terms of salary increase. and the teachers were trying to hold the line as far as teacher evaluations being linked with student performance on test scores. the city was trying to push that up to 50%. some of the teachers were saying look at the population we're working with. many of these children, more than 85% of them are low income and require or rely on breakfast and lunch to get their basic nutrition each day. that says many of these children are coming in to school hungry.

so when they're testing under those kind of conditions where they're hungry and coming from unstable environments, makes it very difficult, the teachers say, to link their evaluation to the students' performance and test scores. seems like both sides got some of what they want. thankfully they are not, they are back in the classroom today, becky. >> and that is good news. thank you very much for joining us today. >> you bet. when we return on "squawk box," governor bob mcdonnell on the mitt romney video, the president's appearance on david letterman last night, and what we can expect from the presidential debate. right now as we head to a break, though, take a look at gold prices this morning. touching the highest level since late february since japan announced a boost in the asset purchase program. "squawk" will be right back.

welcome back to "squawk box." in the headlines this morning, it's a big day for fresh housing industry data. and in about an hour, the

government piece going to be out with august housing starts data. and then at 10:00 eastern time, the national association of realtors is going to be issuing existing home sales, also for august. mortgage applications fell by .2% last week, that's according to the mortgage bankers association. however, re-financing demand rose as mortgage rates touched record lows. the average 30-year fixed rate fell to 3.72%. that's the lowest in the history of the group surveyed. and american airlines 11,000 workers that they could lose their job. the airline expects that only about 4,400 people will actually be laid off. becky? >> andrew, thank you very much. it is about seven weeks until election day, and the presidential race is heating up. virginia governor bob mcdonnell joins us right now. a romney surrogate and chairman of the governors association. governor, thank you for joining us here. >> thank you, becky.

>> you know, things are certainly heating up, but there's a new poll out today from nbc news and the "wall street journal" that shows romney ahead -- romney behind by five points to the president. and i wonder what you think needs to happen at this point to make it a more competitive race. >> well, we need to get more votes. listen, you know, this is -- we've seen polls go up and down over the last couple of months. there's only one that matters. i think the debates are going to have a big impact on who people vote for. and as people really tune in now post labor day, becky, i think they're more and more concerned about the guts of the economy, the jobless rate, 8% for 43 months, the debt, which is unsustainable in this country at $16 trillion. energy prices, which have doubled. and so, these are the things, i think, that dominate. that's what independent voters care about certainly in virginia. and i think it's going to be a horse race to the end. >> what does mitt romney need to do in those debates, governor?

>> i think he needs to show the crystal clear difference between his vision for america and between barack obama's record over the last four years. the president's tried. the president just hasn't succeeded on all the big things that americans say they're going to vote on. the jobs economy, energy, debt, taxes. we're not any better off no matter how the president tries to spin it. so i think making that comparison, number one, but number two, i think he's got to close the deal even better by saying and this is my specific plan and this is what i will do. and based on my record of getting results and as governor of massachusetts, the olympics and private sector, this is why it'd be better for you and your families. i think that's the closing argument you'll see for mitt romney. >> that sounds an awful lot like what you laid out earlier today. >> well, i think he should get off a lot of obama's past and talk about what america would look like with four more years of obama in 2016. and what it will look like with him.

would romney make the case, you'll have 5% unemployment. with obama, we'll have the same. all these different things, we'll have no defense with obama. we'll have a defense with romney. paint a picture of 2016 what kids will look like in schools. what growth will do for poverty programs. we won't be paying for poverty programs out of borrowing from china, we'll be paying for poverty programs out of revenues created from the growth economy. i mean, and we can take care of the -- those that fall through the net. but we've got to paint a picture going forward. i'm sick of saying how bad obama was in the past. we're going to get the same years coming forward. more regulations, more taxes. all of these things. paint and picture. >> governor, do you believe the results i was just talking about

with the latest poll. and you do say polls go up and down. with the exception of rasmussen -- >> rasmussen -- >> is that him leading? romney leading. >> rasmussen was more accurate than any other poll in 2004. >> we've got to ask the governor. >> governor, what do you think? >> well, what i would say is five months ago, mitt romney was down by 8% in virginia. depending on which poll you look at now, there was quinnipiac down today, both of those are margins of error. it's a horse race, he's doing better now than 2008. this is close and it's going to come down to two things. it was a closing argument, and i think what you heard earlier is painting the picture of the two visions and what it means going forward for four years is exactly right. and convincing those independent voters that they and their kids and grand kids will be better off with a romney presidency and

the specific plans on trade, on jobs, on workforce development, on energy, small business development. that these will create a better picture for america than what we got now. we're 23 million americans that can't work, and 6 trillion of new debt under president obama. we can't keep going on this way. i think that's the closing argument. the debates are going to be critically important to move those last 5%, 6%, 10% of the undecided voters one way or the other. generally, when the president hadn't closed the deal with only a little over a month to go, those people generally will break for the challenger. and i think that's good for romney. >> you mentioned that you'd like to hear more specifics. and you think that's what mitt romney needs to lay out. it's tough to do that just in debates when you're in a tightly controlled format and have a limited amount of time. do you expect to hear more specifics on things like the tax plan, energy, in some speeches along the way? >> well, i think he's been a lot more specific than president obama who knows we're in debt up

to our eyeballs and won't even except the simpson/bowles report -- >> but as a challenger, you probably have a higher hurdles to jump over to get there, correct? >> well, i'm not sure. if you have four years and you say give me four more years and i'll tell you what i'll do later on. that's not much of a -- i do think that people want to say how are you really going to get this done? i know things aren't working now. and i know that we need a change. but what exactly -- i mean, that's a natural inquiry. i think he has laid out with both some of the ryan plan as well as cuts of $500 billion in spending to be able to start this deficit reduction plan. he's laid out the beginning of at plan. he's been more specific than the president, i would say. and the bottom line is no matter how the president spins it, 23 million people unemployed, $6 trillion of new debt, no energy plan, gas prices doubling, not acceptable. and mitt romney can do better.

>> polls on obama care 53% against 34%. if there's another four years, obama care will be law. there's no -- if the president gets back in, right? >> that's a very good point. >> no question, it's 53%, 43%. you've got to look at that poll too. and people aren't single-issue voters, but 53 -- and right track, we heard all this improvement from john about the right track has gone up to 39%. only 39% think we're on the right track. it's amazing that bill clinton's speech seemed to convince a lot of people that you don't -- you're not really as bad off as you think. and no president could've done better. and not that -- >> with all due respect -- >> not that bill would maybe mislead us, but there's a book out called "the amateur" about the obama presidency and that title came from bill clinton -- you can say it's -- that klein's exaggerating, but the bill

clinton speech turned a lot of things around it seems, governor. >> that's a good point. bill clinton's a team player, he gives a great speech, but he doesn't believe that. because he actually did it in four years. he worked with newt gingrich, they got a lot of big things done for welfare reform, budget reform and ran a surplus, the first president in 30 years, over the last 30 years to do that. so he doesn't believe that either. but he's being a team player. and president obama's gone the other way. he hadn't gone a bit to the center, continues to move to the left. he admits he's a redistributionist. and this is an important debate is how do we want to get more people dependent on a good job and on themselves and their families to be able to pay taxes to be contributors to the american dream? i mean, that's really a lot about what this campaign is about. i think mitt romney's ideas will trump the record of effort and failure of barack obama. and that's the closing argument and that's why i think he'll win virginia. >> governor mcdonnell, thank you

for joining us today. >> okay. thanks very much. we're going to have much more from jack welch when we return. plus, a call that may have derailed a rally for train stocks. we've got the details on that when we return.

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csx, norfolk southern, union pacific, and kansas city southern, the reason, the fear of a bubble. outperforming the s&p by 10% since warren buffett's acquisition of burlington northern. somebody kept us in locomotive engines. was that you? >> and we've done very well. >> i know you have. i was trying -- that's what i was saying. i was saying. all you want to talk about is -- and two other instances of major buffett investments in rail. once enthusiasm wore off, stocks in the sector quickly gave back half of their gains. who knew, though? remember, we built the rails back in the 19th century. >> coal is being exported, coal is going up like crazy, gas is $9 in europe. >> becky doesn't want us sending any stuff anywhere. >> coal i'm okay with. >> you're okay with. >> it's interesting that coal is now the fuel of choice in europe.

and exports to europe are just going to go crazy with $9 gas. >> and natural gas, we had a story yesterday how the japanese want to import our natural gas because they're trying to move off nuclear since fukushima. i'm opposed to exporting our natural gas. >> i heard you yesterday. >> you didn't -- >> i didn't agree with you. but i generally agree with you. >> nobody agrees with me on this point. i know it's a protectionist thing, i know we should be about free and open markets, but i also think we should find a way to energy independence. we're not using it properly right now, which is why the prices are so low. we haven't built the infrastructure ourselves so that we're using more of the natural gas. >> you know, we have -- i can give you story after story, business after business, minot,

north dakota is a total boom area. we can't ship our pre-fab buildings in this company we have, we can't get them there fast enough. there aren't enough trucks to take them there. it's crazy. the pipe we can't get there because of transportation, the roads can't handle it. i mean, it's -- the boom in north dakota is incredible. 10,000, 15,000 jobs -- >> there's not enough housing there to house the workers who have been going up. you hear about all these things, but how come -- maybe it's happening. how long does it take to build the infrastructure? >> it'll be built in 18 months. now then you've got the marcellus fields in pennsylvania and west virginia and all these. and because of $2 gas -- >> right. >> it's tough to bring it out. >> by the way, not to change subjects, but since we were talking about bill clinton the last segment, a very careful viewer wrote in to say that we

should've listened to bill clinton very carefully because the actual quote i think supports your cause. he didn't say that he couldn't have done better, he said that he couldn't have brought the economy fully back was the quote. so he's saying he couldn't have brought it fully back, even i couldn't have done that. that whole back and forth of who -- >> it was a very successful president. his speech has little relationship to today's world, okay. he was a team player, pumping up barack obama. and he did it -- >> do you think this is all about hillary 2016? >> one might suspect that. i don't know for a fact if that's true. look, i'm a bill clinton admirer, so i'm not tearing him down, he gave a hell of a speech and gave the democrats the bounce. obama's speech didn't give them a bounce, i'll tell you that. >> wouldn't the "wall street

journal" poll suggest something happened? >> he got -- >> he got a bounce. >> you're saying -- >> clinton speech gave them the bounce. >> do you think it did? >> no. >> flat as a pancake. same old stuff. clinton was inspiring. >> yeah. a lot of people did think that. clinton's speech drew a huge draw even as it was going up against an nfl game. the league opener for that night. when we come back, we'll have more from jack welch. and in the next hour, co-founder of the case shiller index, he's going to talk to us about the state of today's housing. in honor of talk like a pirate day, here's a joke for you. who was a pirate's favorite reggae artist? the answer when "squawk box" returns, arrr.

welcome back, matey, here's the answer to the talk like a pirate hour. who's the pirate's favorite music arrrrtist, if you guessed bob marley, you are correct. >> welcome back, everybody. our guest host is jack welch. he's the founder of the jack

welch management institute. and jack, when you're here, we usually talk a little bit about the economy and what you're seeing through the lens. how are things both in the united states and europe. >> and china? >> let's talk about the u.s. in almost every business, there are pockets of real success. let's take, for example, the enormous burst in rental housing. the command for rental housing is incredible. so we're in the home supply business. we do cabinet doors, home depot, supply, we do vanities and things like that. we sell vanity kits as fast as you possibly make to landlocked and multifamily housing who put these things in. we charge $500, they increase the rent $100 a month, the pay back is in months, and the game is on. people are renovating rental

places and motels and hotels because they're occupied. three years ago they were taking a room in a motel, tearing it apart, bringing the fixture over and fixing the other room that was leaking. now they're renovating those things. so the home rental idea is moving strongly. you take the marcellus fields, we can't get pipe up there fast enough. we can't get pre-fab buildings up there fast enough. i mean, i'm not talking marcellus, i'm talking north dakota in the basin. there are pockets everywhere. in the internet businesses that i'm involved in, business remains strong. search and applications are strong. match.com remains very strong. these businesses continue to grow. >> but you say pockets as if that's the exception. >> the pieces. no, there are pieces.

but the economy in general, in my opinion is muddle along. restaurants, the check is smaller. but the traffic is good. the people are maybe not having a dessert, maybe not doing this. >> maybe not having alcohol or something for the bill to add up. the check is smaller versus when? >> '07, '08. >> okay. >> if you look at that. but everything's a little better. it's real. but it's not taking off. we're 1.5% to 2%. we're not trading jobs. one great statistic is most of these businesses are operating at about 70% or 80% of the 2007 peak in revenue. their profitability is back to 2007/2008 levels. >> because they cut the heck out of jobs. >> yes. 30% fewer people working in these jobs.

and automation has taken out tons of jobs. the old belly to belly salesman is replaced with an ipad and other information. we don't have to have all these people chasing inventories. the stories of productivity are incredible in these plants. you're not going to get some of those old jobs back. unless you get big demand. because you've got to put more people in the street for that. but in general, the stories are the same. oh, we're recovering. yeah, we're back to 75% of where we were in '07. but our profits are back to where they were. but we're 30% down in people. it's a common theme. business after business after business. >> we're going to continue this conversation with jack welch. thank you for sticking around. coming up, is the housing sector on firm footing? that's the question, the cohch founder of the case shiller housing index and professor of economics is going to be joining

us to talk about whether or not low rates are helping or hurting the case. that's a pun. "squawk box" will be back after this. for the spender who needs a little help saving. for adding "& sons." for the dreamer, planning an early escape. for the mother of the bride. for whoever you are, for whatever you're trying to achieve, pnc has technology, guidance, and over 150 years of experience to help you get there. ♪

jack is back. >> we need more of it. we need better education. we need all the things we know

we need. we need a more supportive government. >> one more hour with the master of management jack welch. and school is back in session in chicago. >> last thing i need at this point in my career is 1,500 ferris bueler disciples in these halls. >> teachers end their strike and head back to the classroom. >> bueller, bueller -- >> and a read on real estate. we're going to get housing starts out at 8:30 a.m. eastern. but first, chip case is going to give his expectations for the housing recovery. he's the co-founder of the case-shiller home price index. the third hour of "squawk box" starts right now. ♪

welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernan along with becky quick and andrew ross-sorkin. our guest host today, you haven't done that one yet, have you? >> not this jack. >> jack and jill went up the hill with a dollar and a quarter each -- >> yes, but there are children who watch this show in the morning. it's a family program. >> jack, it's national pirate day. he won't tell pirate jokes, but he's got a lot of good analysis about the global economy. did we get to china? we've got to talk about china quickly. >> we didn't get to europe. >> europe, china. >> we haven't talked about belize. >> jack is founder of the jack welch institute management institute. he wrote a couple of best-sellers, straight from the gut and -- >> "winning." >> charlie got that from you, didn't he? >> it came after --

>> another great one, charlie sheen. >> oh, joe. >> let's check out some u.s. equity futures. this morning, up -- what? some people watch it. up 29 points this morning. and that was after we've consolidated gains above 13,000, andrew. 13,564, s&p, 1,460. people are talking about 1,600 and 1,600. >> this year? >> let's talk about the kids, becky. >> the kids watching the program or back in school. >> there are some kids back to school. in chicago, students are heading back to the classroom today. this is the nation's third largest school district. after a week of picketing and protests, the teachers union voting to end its strike. the rank and file teachers have to approve the deal. that's expected in the next couple of weeks. >> we said that it was time to -- that we couldn't solve all the problems of the world with

one contract. and that it was time to suspend the strike. >> this settlement is an honest compromise. it means returning our schools to their primary purpose, the education of our children. it means a new day and a new direction for the chicago public schools. >> we'll get a live update from chicago later this half hour, but jack, we have been talking about this this morning. again, you heard emanuel calling this a compromise. but there are not a lot of things that they definitely got in this. merit pay is out the door. the governor -- the mayor had to give up on that idea. there is some link to performance in terms of link to the students' performance in terms of whether or not you can get rid of some of these teachers, but it's a small percentage, 25% to 35% over the life of the contract and it only affects the teachers on the very lowest rungs. >> four years from now, do you think the school testing will be much different than it is now? after this contract? come on. we need a quantum change in education. we need charter schools, we need

vouchers. we need to challenge this teachers union which is all about the teachers and not about the parents and not about the students. we have to get wildly aggressive in this situation. i mean -- >> what do you say about the parents story, though. that's one of the things we talked about earlier in the show. over and over again. it's an issue that the teachers say, look, i can't take responsibility because, look, the kids are coming in. they're hungry, they don't have the support system. >> that's an argument for why bother? >> no, i know, but -- >> the parents are -- >> i'm not saying it's not a good argument. it's an argument. the answer that becomes. >> these pathetic stories where the parents are trying to get their parents in good schools. come on, you see that. >> no, i absolutely. >> the deepest part of human nature and society. how long have we been saying

it's not the teachers' fault, it's the parents' fault? >> i think it's the teachers' fault, but there's another element. >> let -- nothing is going to change in the schools, in the chicago school system after this. >> absolutely. >> after four years, i'll bet you anything on that. >> i thought rahm was -- you know, had tiger blood. >> in the middle of an election where his candidate in the election, the last thing they need is a fight with the teachers union. come on. >> i know. >> it went on for a week. >> the teachers union knew exactly -- >> you saw christie got in new jersey, that was a better -- there was more there, right? >> we need even more, though. >> look what happened in new york with cuomo, he rolled over like -- right? he folded like a deck of cards. >> wisconsin, they got something -- >> they got something. >> the guy had to run again to stay governor. >> but he got something. we need -- if we give these speeches at these conventions, education, our children and our

grandchildren. we're not doing any anything about changing it. it needs a quantum change. we need more charter schools, need more vouchers, all kinds of testing. we need to merit pay for teachers. we need to make the best teachers rewarded and heroes. >> and it's something that both sides of the aisle have agreed on. democrats and republicans who have backed up the idea of charter schools. bill clinton's been in favor of it, president obama's been in favor of it, something that republican presidents have been in favor of. it's amazing you can't get something passed when you have bipartisan support. >> we have to do it. we are talking about an education, if you will, war, in a global economy where we need the best and brightest to compete and nothing will change in the chicago schools as a result of this deal. nothing will change in terms -- those kids' scores were so pathetic in their fourth grade reading and eighth grade math, they won't change four years from now, nothing's going to change. >> i need to do -- you didn't

see the paul o'neill day where i tried to talk about any of these things and all he said is we need someone to do early intervention with some of the kids that aren't doing well. or what was his thing and you said you agreed with everything he said? what was his basic premise that we -- >> his basic premise was -- >> more money -- >> more money, but you have -- >> money is not the issue. >> find the kids that are predestined not to do well -- >> and try to figure out how to work with them and the families. >> part of his argument was this was a teacher problem. he was saying how do you deal with the other issue? that was the fundamental basis for the conversation. >> he gave no credence at all to trying to change the union situation, which is paramount, which is the key thing. i don't know. in my opinion. >> without question. without question. but we need a quantum change. these little incremental one-hour -- >> when we talk about what we're

trying to do, it all sounds so normal to look and see if you're being successful in what your job is. if you're not being successful, yo uh don't have a job for life. you know, all of these things -- every other business -- i mean it's run as if it's -- >> the president -- >> there's one difference. the students aren't like employees, you can't fire the students. >> i know you don't -- >> the insurance -- you should be able to. >> the point is, if -- if your students aren't performing, if you will, you can't get rid of the students. that's the argument. >> you get merit pay, you excite teachers, you -- >> i agree with all -- there's 100 things we've got to do. >> the idea that the democratic convention or republican convention will say, we need to invest in education. what is investing? we're spending like drunks in education. that's not the problem. you look at the dollars spent for a student over the last 20 years, it's gone through the roof. so that's not the issue.

it's not dollars. it's management. it's management. >> paid for performance is just a given with you with executives, with any -- >> you know what? i think it should be paid for performance for teachers. >> i'm not disagreeing with you. >> that's the whole -- >> it makes your job that much harder. >> after two or three years, you're there for life no matter what you do. you see some of the stories in new york city. some of the really bad cases of people you can't get rid of. >> back in the rubber rooms. >> not only that, people actually can't get fired. i won't name some of my teachers, but i had some good ones and some gad obad ones. >> my son goes to a public school, fantastic teachers. >> but he's rewarded and they reward them and excite them and respected would take this thing to another level. you've got this incredible bl k block -- >> and you know why -- >> and it wouldn't survive in a competitive world.

>> and it comes from union money and the union money is powerful with electing their constituencies. it'll take care of -- >> and that is the problem. >> right. it is the problem. >> i agree with you on that. >> and the kids are the ones getting screwed. >> not even the politicians beholden to them that were taken down. they didn't support him in his election for the mayor of chicago. >> we know somebody who is very close to -- who is very beholden to him. this couldn't drag out, right? >> i mean, this chicago thing and the settlement and they meet and talk about -- nothing is going to change. >> all right. let's give you one more headline. goldman sachs naming a new cfo, senior trading executive harvey schwartz is going to be replacing david viniar, a small group of executives considered potential candidates to take over when blankfein eventually steps down. this probably gets rid of a lot of the talk of blankfein stepping down any time soon

because you wouldn't see these two steps down at the same time. he was vital in protecting the company during the financial crisis. and in our global market headlines, japan's central bank becoming the latest to boost monetary easing. the bank expanding the easing program by 12 trillion yen, about $126 billion. this helped the nikkei finish at a high, coming at an odd time with tensions with china about a bunch of rocks out in the middle of the ocean. and china, there was an official yesterday, was it an official or someone who was a professor making this argument that they should declare war on japan through the bond program. japan is the largest holder of the debt. and it's a big day for housing data. we're going to talk to chip case about the upcoming data housing starts. and that as we head to break. check out the "squawk box" market indicator.

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withing back to "squawk box" this morning. a big day for housing starts.

august data, all that's coming out this morning. and joining us now to talk about it, chip case, professor at wellesley college. before we get to that, since we haven't talked to you since the official announcement of qe-3, and we were talking to jack earlier about it, i wanted to get your thoughts on whether you think it's going to have an impact on the housing markets and a meaningful one. >> well, actually, the starts number coming out today is real important in that regard. because the way monetary policy is worked in the past, of course, you want to stimulate the economy if you pump money, and that lowers rates. rates are truncated -- we're at zero, rates can't go down any more. the effort is to save the housing market. and you've got to get the transmission mechanism back. that's why i think if starts comes up this month, it's a very important indicator. but i'm a little worried about

whether it's going to come up or not. so whether qe-3 is effective, or not, is dependent on whether it has a lower interest rate at the high end. >> if you were ben bernanke, what have you done? >> i probably would've done the same thing, but i wouldn't have -- i mean, it's -- nobody believes it's going to do very much. it did more than i expected to do, expected it to do in the bond markets. you've got fannie and the fannie and freddie thing with a pile of paper that went up in value. so that was a good thing. but it's not -- it's not like the good old days when the feds leaned one direction or the other, interest rates went up or down and housing starts responded by going over 2 million, now we're stuck below $800,000. >> walk us through your expectations for today. >> well, i think the big number as i say is starts. if you look at where starts is today. normally it runs between 1 million and 2 1/2 million. the average for over the last 50

years has been about 1.5 million. we're now down below 800,000. there's only been one month before 2008 in the history of the numbers, which go back 50 years, it's been that low. and we've been down there now below 800,000 for a good 45 months, four years. and it's just starting to creep up. and so i'm -- i'd love to see it go over 800 today. i fear it's not going to because there's preliminary numbers around it that make you worry about it. but i think starts is the big number today. >> jack, what's your view on housing these days? >> i think it's coming back slowly. one of the problems you have in terms of the number of jobs you get on housing is we have an enormous overhang of lots. for example, the lots, we've got 15 months of lots, developed lots. so you're not getting the

piping. you're not getting the infrastructure. when you put up a house, so you're getting the contractor putting the house up on an existing developed lot. >> that's already there. >> and that costs, and that doesn't give us the jobs we normally get from a housing start. >> hey, professor -- >> he can comment -- >> do you agree with that? >> yeah, i do. it mean, i think the other thing that i think you need to focus on today, though, is not lots, but it's -- it looks like prices are going up. i think the most important thing is that prices have turned around. and they're going up. but despite that fact, it doesn't seem to be driven so much by demand, but by a reduction in supply. what do i mean by that? i mean, when people go looking for houses in the normal part of the market, they find inventory out there. a lot of people are not putting their houses on the market as we

thought they would. we thought there was going to be this big burst of property put up for sale once the market turned. and it's not happening. and one of the reasons it's not happening, i think, is people made decisions two or three years ago to stay. not to move, not to change their dwelling unit. so they fixed it up. and those people who might have traded two years ago are not coming back into the market. so you get this paradox of no movement in the volumes. existing home sales for 4 1/2 million, i think they're going to come out close to that again today. starts are at all-time lows. so the volume numbers aren't there given prices have turned around. and the only way you can explain that is if the supply side of the existing home market is smaller than we expected it to be. >> professor, how much of that is because of the mortgage foreclosure process? that's been slowed down in a lot of areas. we haven't seen the foreclosure properties coming back on to the market as we expected. >> that's true.

they're still sitting there. there's a lot of people under water, although a little hike in values will reduce the number under water. but it's -- it's -- it's troublesome that the supply side is not there. the other thing that's happening is homeowner expectations. bob shiller and i just did a paper the other day, just finished it where we looked at five years, actually ten years of expectations where we surveyed. we have 5,000 questionnaires. we asked people about their attitudes toward home ownership. we asked people about their expectations, about prices, and there's no question there's been a sea change in the way people look at housing. also, the demographics play into that. because you've got, you know, 33% of households are now single person households. married couples with kids are down from 45% to 21%. and you've got a different composition, and rental property, we've created 7 million households in the last

seven years, 6 million of those are rental households. >> that's amazing. >> before you go, i don't know if you saw the front page of the "new york times." i don't know if you can see it there. this is a $90 million view. did you see this this morning? this is the view overlooking central park from that new tower going up. and it's an article about really the high-end both in new york but also talking about some of the other big cities where there's some really big number properties that are still there. i know it's -- it may not be indicative of much, but you have a view? >> yeah, this is -- the market is real interesting. when you look at the housing market, there's 5,000 housing markets. but the high end market is fascinating to watch. there's activity there. and there's activity in the baby boomers who anybody who bought a house in california or in the northeast, anywhere before even the second boom has got a lot of equity. and they're moving around. they're what's creating this increase in price and this new activity. so it's fascinating to look.

and the high end is just incredible. house is worth what someone's willing to pay. and if you've got a lot of money and you can use leverage and you like a place, you can bid its price to the moon, that's happening in some of these high-end markets. >> thank you, professor chip case. appreciate it very much. >> good to talk to you guys. >> absolutely. when we come back, we'll get the government's latest read on the housing recovery. housing starts for august at 8:30 eastern time. we've been asking for your jokes for international talk like a pirate day. we've gotten some like what's a pirate's favorite genre of music, arrrr & b. you know why i sell tools? tools are uncomplicated.

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welcome back to "squawk box," everyone. making headlines, everyone. walmart and humana are teaming up. financial incentives for purchasing food items that are designed as healthy. they'll get a 5% credit on eligible product purchases that can be used for future trips to walmart stores. when we come back, we have more from our guest host today jack welch, and we'll be getting the latest read on real estate. housing starts are a few minutes away. economists are looking for a 2.5% rise in the august numbers. by the way, the answer to that

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welcome back. we're a long way away from housing numbers for august. it's only 29. looking for 765,000 on housing starts. that would be an increase of 2.5%. u.s. equity futures is something that i could talk about for a while. and waste another 30 seconds. up 36 points right now, 36.36 because fair value is down 12. there's a gentleman named rick

santelli you may know and love. he's standing by at the cme group in chicago. and in addition to giving us a numbers, which he does, if i -- if i massage him just the right way, i can usually get him to say something. >> about the teachers strike. >> about the teachers strike. rick, the numbers. >> the numbers are 750,000 seasonally adjusted analyzed units on starts. that's a bit light. but it's in the neighborhood. last month was revised a bit lower. this number's going to be up over 2%. the permit side, a little different scenario. 803,000, now, that's actually a little better than we were looking for. but we also saw a little bit of revision, not much. and that represents the number of down, about 1%. how does that 750,000 stack up? well, let's see, for june we were at 754, last month we were in the 730s, so it isn't a bad

number all in all. the light number for the year was in may around 706,000, no great shakes there in the market. you know, unlike the national association of home builders when we at least popped into that 40 zone, we're not getting a lot of market movement on this. i don't know, as for the strike, joe, i don't know. i caught a bit of the show and i'm always happy when i do running around getting ready. but whoever it was nailed it. you know, the teachers' union was very smart. they had everything on their side. the last thing anybody wanted in the, you know, home city of the president of the united states was a fight on the union side. you know, the kids definitely didn't win. but the strike's over, and i guess you look at that as the positive in the equation. >> sure. >> our guest host is jack welch. >> well, i mean, the 745, 750 -- we're talking about a little

tweaks. we're so used to our country that did 1.5 million to 2 million, we're playing down here in the minor leagues here. we're going nowhere in housing. >> you know what, jack? it's always a pleasure talking to you. i don't think we're really going anywhere in the economy at large. >> right. >> and just because we're looking more and more like europe and we're lowering the bar, listen, certainly we're -- there's aspects of the economy that are better today than they were a year ago or two years ago or three years ago. but i believe in mike ditka football. there's only one place you want to be and that's in first place. you never want to give up, no lead is too big, and we need to get back to that type of thinking in this country. this is in every possible way about being better than the competition. we need to foster that spirit of intensity. that's what we need. what do you think, jack?

>> amen, i couldn't agree with you more. we've got to start thinking big, go after these things in a big way. make quantityive moves. >> and we're not there yet, but once you start to slip or once the spread narrows between first place and all the other places in the age we live in, very difficult to reverse that lost ground. go the to get to work like yesterday. >> amen. >> very good. rick, we're going to let you go, rick. and should we go back to jack? or you want to -- we have other stuff coming up. >> we've got some other stuff coming up, including jack welch. >> we're going to go back to jack, actually, unless -- i think we need to go. do we? we don't need to go, do we? no, we don't need to go. >> what did you finally decide on china? it's bottoming out? or more to come? >> well, we've got -- he knows firsthand, but we've got we're

going to do 5%, 6%, gdp which is a staggeringly low number for them. the housing thing, which they tried to tamp down is now standing and get away from them again. we've got a new leadership change here, and we don't know anything about this new guy. he disappeared for a while, and we're going to find out more when he gets in there. china's in pretty good shape. relatively speaking, compared to the rest of the world. >> the rest of the world. >> in the brazil, europe, japan, they're in pretty good shape. it's tough. >> what about belize? >> you know -- >> i'm not -- >> i know very little about belize. >> they're restructuring. >> if china's at 5% to 6%, they may be in relative good shape compared to the rest of the world. what does that mean to the rest of the world?

if we can't continue to see 7%, 8%, 9%. >> they've got the tools because they've got the money. so if you talk about pushing the pump, they can prime that pump and get it going again. and they -- and they have a system that they can say here's what we're going to do. they don't have to go through the machinations that everyone else has to go through. i'm confident that china will not be the problem. but tomorrow we'll have a lot of good insights that are a lot better than mine. mine are from 55,000 feet reading about it, but 5% to 6% is not very good for china. they're used to 9%, 10%, 11%. >> the thing that struck me yesterday, there was a story out late that talked about -- i don't know if it was a reiters story or where it came from, but they said the chinese were looking at japan with all this strife and thinking maybe they

should retaliate by punishing them through their bond purchases. they're the biggest owner of japanese debt, which makes you think about what they could or couldn't do to the united states if they were unhappy with something because of the amount of our debt they owned, as well. >> you've got to treat them with some care. no question about it. they've got the treasures -- >> they have richard fisher on yesterday. >> i saw that. >> both of them continue to talk about uncertainty and regulation being a problem for small businesses and for job creation. but you blew them off too. i mean you kind of -- >> i did not.

>> did you bring -- you bring real regulations -- >> i've got a new one for him today. >> you did? >> by the way -- >> i don't feel that way at all. what i feel like is they're

somewhere in the middle. the regulations have something to do with it and demand has something to do with it. >> agreeing with what the democrats say. >> no, it means -- >> it means raising taxes, it means life isn't black and white. >> well, let me give you the regulation. you're a defense contractor. >> okay. couldn't it be something else? he would never be. do i look like a defense contractor? do you want me defending anybody? come on. >> you've got subcontractors. joe is your subcontractor.

>> uh-oh. nice. >> and you're giving joe a contract for $25,000.

>> that's there -- because instead of saying how do we create -- >> all i'm trying to do is explain why they've even written a rule. >> everything should be viewed in the prism of job creation.

every regulation. >> every regulation should go through a filter. will this create jobs or will this hurt jobs? >> but you can only tackle so many problems at once, tackle jobs, worry about it later. >> at the beginning of this administration, all these things kept happening. >> your last -- >> yeah, all these things kept happening. and i would say to becky, doesn't he know that sooner or later you need job creation to get reelected? so it's in his best interest not to be bashing business. and i said that all along, you can't get releblelected if you' not probusiness. it's in your best interest to get jobs. but what i didn't factor on is that you could -- you could not do it and still get reelected which is what we're seeing. you could still be for 43 months and control the discourse and what people are talking about and control it to where jobs aren't paramount or someone else's fault.

he could do obama care for a year and a half. >> everybody talks about the financial cliff that's coming at the end of the year. >> yeah. >> the tax issues and all that. >> right. >> not many people are talking about the regulatory cliff that's going to come. all these things are backed up waiting, and these guys are armed with things on ozone, how about this? this law that they wanted to pass that all cops must have the backup -- >> oh, backup camera. >> yeah. >> the reverse camera. >> now everybody's got to have it, that's a $3 billion bill. >> who is that for? >> safety. >> creates jobs in the camera industry. >> are you going to give it to somebody else? >> i'm going to give it to anybody who will look at it. >> okay. coming up, we'll have more from our guest host jack welch.

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welcome back to "squawk" this morning. take a look at futures right now. looks like we've got some green arrows across the board. dow looks like it would open up about 35 points high and the s&p 500 about 2 1/2 points higher. also watching shares of 3m this

morning. the economic environment has changed since it set a long-term organic revenue growth target of 7% to 8% annually. it now views that range as a stretch target. so we're going to keep our eyes on that stock as the mark opens this morning. coming up, jim cramer at the stock exchange getting fired up for "squawk on the street." we're going to find out what's on his radar this morning. maybe he's got a pirate thing. radarrrr next. ready or not, the stock of the day is coming up. you're watching "squawk box" on cnbc. first in business worldwide. up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim.

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welcome back to "squawk box" this morning. let's get down to the new york stock exchange. cramer joining us now. good morning to you, jim. i don't know if you've been listening to some of this conversation with mr. welch this morning. >> how can you not? i mean, this is where the action is. everything he says is really compelling. i've got to tell you, the china growth, i hate to disagree with jack on anything, it's never been a good call. i think china will be better, freight doing better. overnight rates for suez max

doing better, electricity coming back, that's a number that can't be retriggered. i want some room on that five six. >> you need to write that down. and we've got can you do a phoner? >> chenos, the stocks are horrendous, but i don't see china falling apart because of the rural to urban, but i would never on a chinese stock. i don't trust their stock market. malnever was into stocks. i'm not go -- and joe was never into stocks. >> jim, goldman sachs, harvard schwartz. you know all of these men, i think, pretty well. >> vineyard, i reveal and i worked for goldman sachs in the '80s. the force of stability leaves things must be stable. he would not leave if anything was wrong. this man gave the best conference call of anybody i follow. what a conference call. it was like a great play.

it was like "cats," you know what i mean? it was like "fiddler on the roof" meets "cats" or "my fair lady." >> can you continue the pier -- you don't have a single joke for pirates day. >> no. >> i do want to mention to you, joe, biotech is so back and it's american we don't talk about it enough. >> that's right. celgene is on the move. gilead is on the move. why not focus on companies that are winning and are american? we're too negative. >> it's taken a lot to go to the bedside, jim. it is. it will explore eventually. you're right. >> yes, it's for real and we pioneer it, we own it and we act as if we're a bunch of bozos here. some of the things we do are life saving and it's done here in this country. the other countries are being left far behind.

europe is losing any competitiveness with bonds. they're losing it, we're gaining it. let's talk about it. stop it. >> you know we don't need price controls and reimportation and stuff like that. that's why europe, the innovation goes south for things like that. celgene is located in summit, new jersey, and they're tearing up the world. >> that's true. that's true. and that was with an old drug that wasn't redesigned. >> they have new drugs. gilead, gigantic market. it is our market. gilead will solve that. last i looked this is not astrazeneca. this is not novartis. this is ours. >> i see something coming up on "mad money" tonight. you're on a roll. >> another company that's taking over the cloud. where are these great european companies? where are the great chinese companies? last i looked they were all me

and two. >> we'll see you on "squawk on the street" in just a few minutes. >> thank you for getting "cats" stuck in my head for the rest of the day. when we come back -- are you willing to take that horrible, jarring -- [ whistling ] >> when we come back we have parting comments from our guest host jack welch. we'll get an update on his short positions on hp, coal and china, and the latest value traps on his radar. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. at optionsxpress we're all about options trading.

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>> we're back. sorry. stock of the day, general mills company, reporting better-than-expected results backing its outlook among the catalysts. recent acquisitions and an improving trend in u.s. markets. our guest host today has been jack welch, founder of the jack welch institute. are you a yankees fan? >> no. >> are you a reds fan? you did time in cincinnati. >> no. >> the washington nationals, is

that even a team? >> i'm -- the patriots threw me a curveball this weekend. i need to get back on the patriots' bandwagon because the red sox have had one of those tragic seasons. >> you live down here now. >> know boston. >> it's a matter of where you move. so what will you leave us with? we didn't really talk about the actual -- the actual tape itself. are you surprised that it became such a big deal or is it the state? >> it's the way it works. what i'd like to leave you with is jim made a point on that, i started out with that. weir the only country that's really innovating. we've got balance sheets are in great shape we need a president and an administration that will release this economy.

we have the greatest country in the world with more opportunity, but we can't keep shackling it. now i want our candidate, my candidate to go out there and talk big. i don't want him talking about what the president said last week responding to a reporter saying the tax bill doesn't work this way or that way. i want to talk about where he's going to take the company. what will america look like in 2016, 14 and 16 under his administration versus what it will look like under the other administration. you will extrapolate the other one all of the way. more regulation and more tax and it's one that's all-encompassing for everybody. lower taxes. make sure that nobody can say a word. he will veto anything that raises taxes on the middle class, make the middle class the winner in this game, bring jobs

back and take care of the safety net from growth. we'll have great growth, 3%, 4%, 5% growth with lower taxes and lower tax rates and more revenues from growth. growth will be the answer and talk about growth every day. put every regulation through a growth filter. does this create growth or does this stifle growth? make energy an important part of this nation. energy is what will bring back manufacturing jobs. if you can do petrochemicals from gas you will take that whole marcellus field and turn it into a huge petrochemical complex that will serve the dows and duponts of the world. >> we thought we were doing that with renewable agency, but that's what happens when the government picks winners instead of letting the market. >> solar doesn't count. wind is 2%. the subsidies are $700 a